Australian Currency Feels Pressure of a Rate Cut

The Australian is on the outs after report a very disappointing jobs report at the end of last week. The weak employment data in Australia has reversed market sentiment and now many traders believe a rate cut by the Reserve bank is in the cards. If Consumer Prices in Australia are in line with expectations when released on January 21 it will give the central bank the scope to cut rates.

The currency from down under has also been suffering due to lack of interest in the commodity space. Crude oil prices have failed to rally and with the exception of copper, most commodity prices have been under pressure during the first two weeks of 2014.

The AUDUSD broke through long term trend line support near 0.8840 and is poised to test the lows made in 2010 near 0.8050. Momentum on the currency pair is negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The relative strength index has also been on the decline, but perked up when prices consolidated on Monday. The RSI is printing near 38, which is on the lower end of the neutral range but still well above the oversold trigger level of 30.

Risk Disclosure: Finances.com will not accept any liability for loss or damage as
a result of reliance on the information contained within this website including
data, quotes, charts and buy/sell signals. Please be fully informed regarding the
risks and costs associated with trading the financial markets, it is one of the
riskiest investment forms possible. Currency trading on margin involves high
risk, and is not suitable for all investors. Before deciding to trade foreign
exchange or any other financial instrument you should carefully consider your
investment objectives, level of experience, and risk appetite.